Business Services Support offers its introduction to procurement training course for buyers. Buyers learn how to procure goods and services effectively to maximise value for their organisation. Value is a concept that many are unclear about. Procurement adds value through better product development, increased customer satisfaction, improved net cash flow and profitability and much more. Our course materials help you understand the nitty gritty of effective purchasing and procurement skills.

1. P ROCUREMENT T RAINING C OURSE

2. I NTRODUCTION & O VERVIEW
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OBJECTIVES
STRUCTURE & OUTLINE
KEY OUTCOMES
ABOUT THE TRAINER
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3. P ROCUREMENT F UNDAMENTALS
Clarifying Industry Jargons & Acronyms
MANY WORDS MEAN THE SAME THING
Supply Chain
Management
Procurement
Purchasing
Tendering
Bidding
RFI
RFQ
RFx
ITT
Specification
Reqs
(pronounce
wrecks)
Sourcing
Competitive
Bidding
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4. P ROCUREMENT F UNDAMENTALS
Component of Supply Chain Management
PRODUCERS
SUPPLIERS OF
PRODUCERS
CUSTOMERS
SUPPLY CHAIN
MANAGEMENT
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5. P ROCUREMENT F UNDAMENTALS
Supply Chain Management Oversees & Optimises
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The processes of buying goods and services from suppliers
(purchasing)
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Converting those goods and services into a finished product
(production)
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Delivering those products (or outputs) to customers (fulfilment)
Our focus here is bullet point 1
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6. P ROCUREMENT F UNDAMENTALS
Procurement Legislation v Organisational Impact
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What is the underlying principles of the legislation
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Ethics /code of conduct
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What is the underpinning legislation
Where to get information
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7. P ROCUREMENT F UNDAMENTALS
TACTICAL F OCUS
Nine Steps of a Purchasing Process- Procurement Cycle:
Determining a
need
Reviewing the
need
Finding
potential
suppliers
Conducting
bidding and/or
negotiation
Selecting a
supplier
Formalizing the
commitment
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Communicating
the need
Following up
Closing out the
transaction
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8. D ETERMINING YOUR O RGANISATION ’ S
N EEDS
Key controls and strategic objectives of procurement
activities
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Ordering time is critical- lead time v safety stock
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Formal write up of needs via specification document- functional,
performance, design , chemical, drawings, brand/trademark
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Component of specification- what is needed & acceptance criteria
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Purchase should never be made without an appropriate budget
Controls should underpin purchasing activities
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9. D ETERMINING YOUR O RGANISATION ’ S
N EEDS
The importance of specification and how to design them
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Description of what is required by buying organisation to ensure
potential buyers bid for opportunity with absolute clarity
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Must be clearly understood and contains terminology known by
industry supplier- avoid internal jargons
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Contains functional, performance, design , chemical, drawings,
brand/trademark
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Includes acceptance criteria
Lets now review some examples and work through a case study
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10. C OMMUNICATING N EEDS T O
P ROCUREMENT D EPARTMENT
The creation of a document called a requisition kicks off the
procurement process
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Different Reqs- standard and electronic, Bill of materials, automatic
reqs.
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Requisitioning is defined as the process that users initiate to convey
to the buyer their wants, needs, parameters
Reqs should be issued in line with corporate policy for – proper
authority, approved limit, social responsibility, green buying
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11. P ROCUREMENT F UNDAMENTALS
R EVIEWING N EEDS
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When requisitions arrive in the purchasing department, they are
generally distributed to buyers for further processing.
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Purchasing departments usually have a predetermined scheme to
guide which buyer gets which requisition. Here are some of the most
common schemes:
REQUISITION ROUTED BY
Category Of
Product Or
Service
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Supplier
Requisitioning
Department
Workload Of
The Buyers
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12. P ROCUREMENT F UNDAMENTALS
F INDING P OTENTIAL S UPPLIERS
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Sourcing methods-directories, B2B directories, trade associations,
internet, chambers of commerce, trade show, telephone books etc
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Some organizations assign various internal classifications to their
suppliers.
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Know your market- very important
The purposes for such classification include:
 to communicate the desirability of the supplier
 to encourage the use of certain suppliers
 eliminate costly inspection processes when unneeded
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13. P ROCUREMENT F UNDAMENTALS
C ONDUCTING B IDDING AND / OR N EGOTIATION
Competitive Bidding VS Negotiation (caveat)
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Bid Where:
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Negotiate Where:
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few suppliers, not enough time, lack of clear specification and selection
criteria, strong likelihood of changes...
Soliciting quotes or proposals from suppliers requires:
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lot of suppliers, you have time, value of savings justify costs,
specification is clear, selection criteria is clear, no likelihood of changes...
RFI, RFQ, RFP, ITB or ITT
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14. P ROCUREMENT F UNDAMENTALS
C ONDUCTING B IDDING AND / OR N EGOTIATION
Competitive Bidding VS Negotiation (caveat)
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Bidding Format:
Sealed bidding  Two-step bidding  Online bidding  Internet Reverse Auctions
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Your solicitation document should be comprised of at least the
following sections:
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An overview of the need for the product or service
A description of the evaluation and award process
Response instructions, including a deadline
A specification
Your quantity requirements
The delivery location and schedule
Terms of both the solicitation and the order
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15. P ROCUREMENT F UNDAMENTALS
S ELECTING A S UPPLIER
A system of evaluating or scoring suppliers
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Financial & Non Financial
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Financial:
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Non Financial:
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resource capacity, operational
capacity, reliability
More checks:
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price analysis, total cost analysis, total cost of ownership & financial
stability
site visits, financial
statements, references etc
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16. P ROCUREMENT F UNDAMENTALS
F INDING P OTENTIAL S UPPLIERS
Here are a few internal supplier classifications:
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Approved Suppliers
Preferred Suppliers
Single Source Suppliers
Certified Suppliers
Barred Suppliers
SUPPLIER STRATEGY
Make or Buy, Manufacturer or Distributor, Multiple Source or Single
Source, Currently Used Suppliers or New Suppliers, Domestic or Foreign,
Diversity or not, national or local, Large or small suppliers etc
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17. P ROCUREMENT F UNDAMENTALS
F INDING P OTENTIAL S UPPLIERS
Pre-Qualification Questionaire (PQQ) v Invitation to tender
(ITT)
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What is PQQ
Why is PQQ important
What is ITT
Why is ITT important
When/how to produce PQQ
When/how to produce ITT
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18. P ROCUREMENT C HALLENGES
FORMALISING , FOLLOW UP
& CLOSING TRANSACTIONS
NEGOTIATION
CONTRACT
WRITING
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